Would you like to know what kind of people are representing you in Washington?  Read below to check out a quote by Jack Reed that was reprinted in today's Providence Journal:

“When homes are doubling in price in every six years and incomes are increasing by a mere one percent per year, Fannie’s mission is of paramount importance,” Senator Jack Reed, a Rhode Island Democrat, lectured Mr. Mudd [former Fannie Mae chief Daniel Mudd] at a congressional hearing in 2006. “In fact, Fannie and Freddie can do more, a lot more.”

— From the Oct. 4 New York Times article “Pressured to take more risk, Fannie reached tipping point.”  


     Here we see a Harvard graduate complaining that house prices are doubling every six years, while incomes are increasing by one percent each year.  Well, if I see real estate prices far outpacing wage growth, I wonder why.  The prices aren't rising because of increasing salaries, or local development (since the price increases are occurring on a national level), and they are growing at a rate far in excess of historical averages.  Did Jack ever wonder why prices are rising so quickly?  Could it be because senators like him were encouraging Fannie Mae and Freddie Mac to relax lending standards and give mortgages to inviduals who obviously couldn't afford them?

     Next time you hear individuals assigning blame for the financial crisis, think of this post.  Think about how Jack Reed, who accepted almost $400,000 from banks and financial services companies over a 5 year period, encouraged the origination of quesionable mortgages.   Those failing mortgages are at the root of the current financial crisis.  Thanks to Jack Reed and his colleagues, we are facing the worst financial crisis since the Great Depression.